Imperial Brands shares offer a 9% yield: should I buy them for passive income?

first_img Don’t miss our special stock presentation.It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.That’s why they’re referring to it as the FTSE’s ‘double agent’.Because they believe it’s working both with the market… And against it.To find out why we think you should add it to your portfolio today… Roland Head | Sunday, 22nd November, 2020 | More on: IMB Simply click below to discover how you can take advantage of this. Our 6 ‘Best Buys Now’ Shares Image source: Getty Images. Click here to get access to our presentation, and learn how to get the name of this ‘double agent’! There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it! Enter Your Email Addresscenter_img It’s not often a FTSE 100 stock offers a safe-looking 9% dividend yield. But that’s what I’m talking about today. Imperial Brands (LSE: IMB) shares rose by nearly 10% last week after the tobacco firm’s 2019/20 results appeared to show solid support for its dividend.For a passive income investor like me, a reliable 9% yield is too good to ignore. I already own Imperial shares, so I was keen to see what new chief executive Stefan Bomhard would have to say. Should I keep buying?5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Let’s start with the good news2020 has been a relatively good year for tobacco sales. According to Imperial, home working has provided smokers “with more occasions to consume” and reduced switching to vapes.As a result, Imperial’s net revenue (sales excluding taxes) rose by 0.8% to £7,985m during the year to 30 September.There was also good news on debt reduction — Imperial recently completed the sale of its premium cigar business for €1.1bn. This money will be used to reduce the group’s hefty £10,299m net debt.What could possibly go wrong?Even though sales rose, profits fell. The company said the mix of brands and geographic markets which saw growth last year was “sub-optimal”. Covid-related costs also affected profit margins.All of this meant that despite higher sales, Imperial’s adjusted operating profit fell by 4.8% to £3,527m last year.However, the real risk for buyers of Imperial Brands’ shares is that Bomhard will not be able to find a way to arrest a long-term decline in sales volumes. It’s no secret that the tobacco market is in decline in most developed markets. These are where Imperial makes most of its sales — western Europe and the USA are the group’s largest markets.The company’s tobacco volumes fell by 2.1% last year. The revenue gains I mentioned above came from a 3.9% increase in average pricing — a trick the tobacco industry has been using for many years.So far, Imperial’s venture into next-generation products like vapes hasn’t been wildly successful. Sales of these products fell by 9% during the second half of the year. This part of the business is expected to report a loss next year too.Imperial Brands shares: my verdictInvesting in a sector that’s in long-term decline always carries certain risks. My top priority is to make sure that if I buy more IMB shares, I don’t pay too much.Fortunately, I don’t think that’s a problem just yet, despite recent share price gains. As I write, Imperial Brands shares trade on six times earnings and offer a 9% dividend yield. Having reviewed the firm’s latest numbers, I’m confident this payout should be safe for the foreseeable future.In my view, Imperial shares are cheap enough to reflect the risks faced by shareholders. I plan to continue holding this stock in my passive income portfolio. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. See all posts by Roland Head Roland Head owns shares of Imperial Brands. The Motley Fool UK has recommended Imperial Brands. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Imperial Brands shares offer a 9% yield: should I buy them for passive income?last_img read more

Cuba under Fidel’s long shadow

first_imgFollowing the death of Cuban leader Fidel Castro, one of the most mythical and divisive political figures of the 20th century, his legacy appears up for grabs.A hero for some and a villain for others, Castro will be remembered for leading a revolution that toppled a U.S.-backed military dictator in 1959 and for establishing a Communist regime on the doorstep of the United States in the midst of the Cold War.But Castro’s record as Cuba’s leader is mixed. Castro ruled his country for 47 years and spearheaded enormous advances in education and literacy, health care, and social equality. At the same time, he imprisoned thousands of dissenters and stifled civil liberties and political freedoms.To understand the complexity of Castro, the Harvard Gazette interviewed Jorge Dominguez, Antonio Madero Professor for the Study of Mexico, who is a leading expert on Cuba. This fall, Dominguez has been teaching a course on the Cuban Revolution, in which he instructs students to look at all aspects of Castro’s legacy. In his last class of the semester this past Friday, Dominguez gave his final judgment on Castro, the trend lines of which resemble his answers to the Gazette in the text here.GAZETTE: Fidel Castro was an extraordinary political figure of the 20th century, and yet for most Americans, including several U.S. presidents, he was seen primarily as a Communist dictator. What are the facets of Castro’s legacy that have been most overlooked in the United States?DOMINGUEZ: He probably was not a Communist for a good part of his life. And an interesting story, which may have not been entirely clear to Castro even on the day he died, is how it was that he went from being a political activist to becoming a Communist, how did he go from being a good student, a popular guy, a great athlete in the nation’s elite private school to do what he did. That’s a story that used to be of great interest to U.S. presidents and to the American public, but it’s good to remember that for some significant portion of his life he was not a Communist.GAZETTE: Who was he before he became a Communist?DOMINGUEZ: He was a political adversary of the Communist Party that existed in Cuba. He had no support, no relationship with the Soviet Union before he came to power. He actually prevented the early development of Soviet-Cuban relations after the revolution. He blocked the arrival of an ambassador that the Soviet Union wanted to send. This is something that U.S. presidents should have tried to understand better. It was more important to understand why so many of the things to which the U.S. government most objected, in Cuba’s behavior and Castro’s behavior, received such broad support elsewhere. Let me give you a specific example. The U.S. said that apartheid in South Africa was wrong, but no one, other than Fidel, sent troops to defeat the South African military when they invaded Angola. No one, other than Fidel, committed troops in support of the independence of Namibia, which had been occupied by South Africa. Henry Kissinger and the Ford administration were appalled at this behavior, but in Africa there was almost unanimous cheer.GAZETTE: How was it that Castro became a Communist? Was it the decision of the United States to isolate Cuba that pushed Castro into the arms of the Soviet Union?DOMINGUEZ: I think his decision to be the man that he was was his own. I never believed in the argument that Fidel was pushed to be a Communist and an ally of the Soviet Union. I think he deserves now in death the respect to say that this is a very smart man who knew what he was doing. He was not a robot, a child, or a puppet of anybody. But the U.S. applied policies that often were stupid and counterproductive — even toward the end of Castro’s career — and facilitated but did not cause Fidel’s shift. Before Fidel stepped down because of his illness, the Bush administration published a 300-page book about how the U.S. was going to help the reconstruction of Cuba. Among the things the U.S. proposed was to help Cuba with education and health care. On what planet were the people who wrote this? It’s true that by that time Cuba’s education and health care were not as good as they have been in the past, and that’s why support for the government, for the Communist Party, for the regime weakened over the past 25 years. But still, in some respects, it was a heck of a lot better than in the U.S., where more babies die at birth in Washington, D.C., than in Havana.GAZETTE: How did the Cold War influence the view of the U.S. about Castro? The U.S. saw him as a pawn of the Soviet Union.DOMINGUEZ: Did the Soviets tell Castro to deploy tens of thousands of troops to Angola? The Soviets didn’t know what he was doing. He did it on his own. The U.S. did finally recognize that he wasn’t just a puppet of the Soviet Union, that he was doing it on his own. His support for anti-colonialist struggle in Africa, and in particular against Portugal, which had colonies in the continent, gave him enormous popularity. They didn’t want to remain colonies, and the one nation that did the most [to help them] turned out to be Cuba. The U.S. was horrified because Portugal was a NATO ally, and Cuba was mucking things up by helping all of these people that the rest of Africa called freedom fighters. What is interesting about a lot of this stuff is that Cubans got away with it, and the Soviets were in the background. Fidel was doing things that revealed a more accurate understanding of the world, in the middle of the Cold War, than the U.S. had.GAZETTE: Was the U.S. stuck in a Cold War mentality that somehow prevented it from grasping Fidel’s real dimension?DOMINGUEZ: It was, to some extent. Fidel said publicly in 1961 that he was a socialist, and he then made clear he was a Marxist-Leninist. And that melted into the narrative of the Cold War. If it’s communism, it must be bad. In the context of the Cold War, there is a way in which thinking among otherwise extremely smart people in the U.S. government, universities, and think tanks got impoverished. Then the thinking became “How do we cope with a Communist?” as opposed to “How do we cope with a guy who is a risk taker, who is brilliant, who is ambitious, who comes from a tiny, insignificant country but thinks that he could be the head of a world power?” The Soviet Union sent lots of troops to Afghanistan, and they couldn’t win. The U.S. sent lots of troops to Vietnam, and they couldn’t win. Fidel sent lots of troops to Africa, and he won the three wars he sent troops to fight.GAZETTE: How was that possible?DOMINGUEZ: Well, he didn’t win them because he was a Communist. He won because he was good at what he was doing. He was a visionary, an ambitious leader, someone who was out to have a major impact on the world and had built a colossally impressive military establishment. Unlike the military establishments in the rest of Latin America, Cuba’s was designed to be deployed overseas. The comparison is to U.S. troops, and troops in France, the U.K., and, in a slightly different way, Israel. Cuba was in that league.Fidel Castro speaking at a rally in Havana, Cuba, 1978. Credit: Wikimedia CommonsGAZETTE: Castro had success in Africa, but what about Latin America? Although his influence was deeply felt in the region, there was never another Cuba to emerge.DOMINGUEZ: He did fail in the way he thought he was going to have an impact in Latin America, and that was because he — and perhaps Ernesto “Che” Guevara, as the more intellectual and more analytical of the two, bears some responsibility here, as an interlocutor for Fidel — because he drew the wrong lessons about how it was that they won in Cuba in the 1950s.GAZETTE: Tell us how the Cuban revolution really succeeded.DOMINGUEZ: The mistake in the interpretation is that it was a bunch of guys who, holed up in a mountain in a rural area, defeat the incumbent regime. And the real story is that it was a much more complex set of forces, often not coordinated, that weakened the old regime. Many of those forces were from the inside: military corruption, conspiracies, and coup attempts, and many university students in the cities engaging in acts of civic resistance and political violence. It was overwhelmingly this urban protest and this internal weakening of the state that brought the regime down. What had happened in the mountains is that Fidel had been surrounded and protected by bodyguards. Everybody else, who might have replaced the old regime, got killed, [but] not him.GAZETTE: Was Castro a hero or a villain?DOMINGUEZ: He was a hero for some. I continue to meet people who are university professors, first-rate academics, who tell me they were poor when they were growing up. If you talk to someone who is older, it’s not uncommon to hear them say, “I grew up poor. I learned to read when I was 35 years old, and my daughter now is … . Wow.” How couldn’t you think he was a hero? Of course, you would. To me, one of the most impressive statistical observations is that 20 years after he took power, and as a result of programs that were instituted, there were no differences by skin color in the likelihood of a newborn baby dying as an infant, and no differences by skin color in primary school completion. That’s not the United States. That is not Brazil. That’s not the case in Cuba today. Once again, there is inequality that is marked by color, but that’s in part because things have become worse for Cubans in the last 25 years. But in the moment when he was able to do the kind of things he wanted to do, some of these outcomes were very impressive.GAZETTE: But for all Castro’s achievements, he ruled for almost 50 years. What kind of ruler was he?DOMINGUEZ: To give you a sense of magnitude, at one point I was able to compare the number of political prisoners that Fidel admitted to holding to the political prisoners that the opposition in Chile under [leader Augustin] Pinochet claimed Pinochet was holding. So there is a bias in the comparison. It’s very simple arithmetic, political prisoners per population. There is no peer. Cuba had many, many more political prisoners. Those who think he’s a villain point to this. In Cuba, just like in Chile, torture becomes an administrative practice through the 1960s, lots of people died, and some died in prison. Others are formally executed through the application of the death penalty after trials that do not meet the standard of due process. Thousands of people were sent to prison for many years for crimes of opinion and association and remain in prison for far, far longer than in Pinochet’s Chile. That’s the ugly part.GAZETTE: Let’s talk now about the U.S. obsession with Cuba. Why did Cuba matter to the United States?DOMINGUEZ: At the beginning, it mattered a great deal. One reason is, “Who do they think they are? This doesn’t happen to the United States.” An expression used by many U.S. presidents for the past couple of centuries was that Cuba was “our backyard.” Secondly, there were concerns over expropriation of U.S. companies, at the time the largest expropriation that anybody had ever conducted against U.S. companies anywhere in the world. And thirdly, of course, it becomes part of the Cold War because Cuba becomes a public ally of the Soviet Union. In addition to that, Castro starts mucking around, supporting revolutions, and deploying troops across the Atlantic Ocean. It’s not irrational for the U.S. to say, “You can’t take the property of our companies without compensating. We don’t want an ally of the Soviet Union to be deploying troops,” and so on. There is a lot of rationality to what became the U.S. response, including the application of economic sanctions, for many years. The problem is that the U.S. policy toward Cuba since 1990 stopped being a rationalist policy. It’s similar to a bullfight when the bull sees red.GAZETTE: The U.S. financed an invasion of Cuba, which failed, but it also funded several assassination attempts against Castro. What was the rationale of that?DOMINGUEZ: The U.S. government thought at the start, “We’re going to invade, we’re going to assassinate Castro, we’re going to do sabotage, impose economic sanctions, and get rid of him.” Years later, the U.S. stopped invasions and assassination attempts but decided to make Castro’s life difficult by sustained economic sanctions. When the policy gets off the rational scale is when these economic sanctions continue after the collapse of the Soviet Union. After the collapse, it’s just, “We have you and your regime over a barrel, and we’re going to do anything possible to get rid of you.” And that’s no longer a rational strategy. The gap between ends and means is enormous. One may think that Cuba’s political regime should change, but at the cost of economic sanctions, tougher than the U.S. had imposed on Iran. Why? It backfired enormously because it became the thing Castro could say to Cubans, “The fault is not in ourselves, the fault is in U.S. economic sanctions.” And the U.S. kept ratcheting up sanctions in the 1990s, culminating with the enactment of the Helms-Burton Act in 1996, which codifies the economic sanctions. Castro ordered it to be translated into Spanish and read over national radio and television to tell Cubans, “See? It’s true. They want you to starve to death. It’s not me.”GAZETTE: And now that President-elect Donald Trump has said he might reverse President Barack Obama’s opening to Cuba, what are the risks of that?DOMINGUEZ: Let’s take a U.S.-Cuba agreement by which the Cuban government commits itself to doing as much as it can to prevent undocumented migrants from leaving Cuba. When someone manages to get on a boat and is caught by the U.S. Coast Guard, the Coast Guard takes him to a Cuban port and the Cuban government receives him. Trump could reverse this policy, and therefore, let all the undocumented migrants wash onto the southern Florida shores. Isn’t that a great idea? Another possible scenario is this: Since 2002, the U.S. has exported to Cuba $5.25 billion of agricultural products, and almost all of it comes from Republican red states. The president could, of course, reverse that policy and say to the governors and the agribusiness companies that they cannot do it anymore. Trump used Twitter to say he’d reverse the deal. What deal is he talking about? There is not a deal. There are many, and these two examples are older. Take a recent one. Yesterday, for the first time since 1961, American airlines landed a scheduled flight that went from Miami to Havana. Trump could reverse that deal. What is that deal? It’s a civil aviation agreement where the two governments solemnly affirm their sovereignty, and only U.S. airlines are flying. Cubana de Aviacion is not flying to the U.S. It’s the part where a mercantilist like Trump would say, “This is great for U.S. airlines, not for the other guys.” So what does he want to reverse? Does he want to reverse the permission to Starwood Hotels to manage three hotels because he’d like Trump hotels to open up? The key point is that a lot of what has been built cooperatively between the U.S. and Cuba serves not just the U.S. agenda but the Trump agenda. No government in the world does what Cuba does with regard to migration. That’s a poster child for Trump policy on migration. The Cubans do whatever they can to enforce and effect the kind of migration policy Trump wants. How could he possibly not see this?GAZETTE: In a famous speech, Castro said after his first attempt to overthrow the [U.S.-supported Fulgencio] Batista regime, “History will absolve me.” What do you think? Will history absolve Castro?DOMINGUEZ: The history part remains to be seen. I do not absolve Castro because Castro’s personal responsibility for some of the awful things that occurred under his rule is really large. I give him a great deal of credit for the good things that happened during his presidency. But if in the end one needs to draw a balance sheet, I cannot justify the terrible things that occurred at his command. Many people will absolve him. Not me. But what’s interesting about this man is his complexity. What I wish in the Cuba course I teach is for students to understand the complexity of this man. The point of the course is to get them to think. One can make a very rational, even emotionally moving, argument as to why Fidel was such a great president. The students can come to the judgment on their own that he was or he wasn’t. But my role is not to indoctrinate them. My role is to help them to think.GAZETTE: So will Castro keep being a polarizing figure for the years to come?DOMINGUEZ: Probably. And it’d be a more interesting history book if it conveys a sense of a more polarizing figure.This interview has been edited for length and clarity.Savelast_img read more